Accessing the world. A “loosen” legal environment will create

Accessing hydrogen fuel
cell’s legal environment and nature of the technology, the appropriability
regime is weak. First, since the technology is relatively immature, property
rights environment is relatively weak in order to increase popularity in this
field. From Francois Issac de Rivaz’s invention of the first 4-wheel prototype
that was powered by hydrogen and oxygen gas to today’s Toyota Mirai, hydrogen
still hasn’t taken off in the automotive sector (Automostory, 2014).1 Majority manufacturers
still experiment with the technology and very few start to produce hydrogen
vehicles. The challenges nowadays are increasing competition from electric
vehicles, lack of refueling infrastructure, high cost of catalyst used in
hydrogen fuel cells. Therefore, hydrogen fuel cell require future study and
innovation, and thus, Toyota released 5,680 patents of its hydrogen fuel cell
technologies patents, representing millions of dollars of research investment on
a royalty-free basis in 2015 (Forbes, 2015). 2 This move was planned to
incentivize innovative fuel cell technologies and expand “hydrogen-based
society” around the world. A “loosen” legal environment will create open
resources and encourage companies to advance hydrogen fuel cell technology to
meet the challenges it currently faces and uncover demands in target market
segments. However, it also implies a lower barrier to entry for new firms to
compete in this segment.

On the other hand, the
nature of HydroHome is its innovation of the business model. Their service
addresses the key issues of refueling infrastructure and hydrogen storage. Imagine
if you are driving a vehicle and there is limited number of gas stations to
fill your vehicle. HydroHome thus creates a platform to fill up hydrogen at any
place. Their business model is simple: get hydrogen supply from ITM Power
Energy, transport hydrogen capsules to HydroHome storage by Hydrogenious
Technologies, and lastly, arrive and fill up customers’ HydroHome installation
stations (PPT).
HydroHome’s business model is relatively easy to imitate—their technique is
considered codified knowledge, which is easy to transmit and articulate. The
most challenging parts in the model are carried out by other expertise:
hydrogen supply by ITM Power Energy and storage and transport by Hydrogenious
Technologies. As a result, HydroHome’s business model can be easily replicated
by other firms.

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I.              
Life Cycle Phase

Hydrogen fuel cell technology
is at the preparadigmatic stage, which means there is no single generally
accepted standard or dominant design. The market for hydrogen FCV is relatively
young. Based on HyARC 2017 survey, majority of the 4,200 fuel EVs registered at
the start of 2017 are located in Japan or USA. Over 90% of these vehicles are
passenger cars, following by fuel cell electric buses (Shell, 2017).3 Considering HydroHome is
mainly associated with hydrogen refueling, we will examine current condition of
the refueling stations. There are only 280 active hydrogen refueling stations
around the world. Japan has the largest number of the stations of 91, and then,
the U.S. has 61. In Europe, Germany has 37 stations (Shell, 2017).4  Although there were a small number of
stations over the last few years, the numbers of new stations opened has accelerated
recently. Since 2017, 140 refueling stations are under construction or in
commissioning. An increase of commercialization also contributes to the growth
in fuel cell electric vehicle sector (Shell, 2017)5. This small but growing
FCV sector indicates this technology is still evolving and firms are competing against
design.

II.            
Complementary Assets

 HydroHome provides hydrogen capsules to fill
up hydrogen refueling stations for residents. But the capsules can be only used
in the HydroHome installer kits, including its installer station and hydrogen
refuel hose (PPT).
The kits are considered cospecilized complementary assets—the installer kits
needed to support hydrogen capsules also depend on the innovation on the
capsules. Usually, a hydrogen refueling station consists facilities of
transport, storage and refueling of hydrogen. Certain technical components and hydrogen-specific
codes and standards are necessary to be met for the construction of a refueling
station. The station comprises of an adequately sized storage tank for
hydrogen, compressors to achieve compression, a precooling system and dispensers
for transporting the fuel. The standards are made by the International Organization
for Standardization and the Society of Automotive Engineers to ensure safety
for the hydrogen refueling station infrastructure (Shell, 2017).6

To make HydroHome’s hydrogen
capsules work, customers need to install their refueling stations. However,
HydroHome does not own these complementary assets, but contracts out the
storage and delivery of hydrogen via Liquid Organic Hydrogen Carriers by the company
called Hydrogenious Technologies (PPT). Under weak appropriability regime, the
holder of cospecilized complementary asset, in this case, Hydrogenious
Technologies will likely be profitable based on Teece’s model (Teece, 1986).
When HydroHome does not possess any tacit knowledge or cospecilised
complementary assets, their business model can be easily replicated by the
holder of the complementary assets or other followers. Also, Teece states that
in industries with high developmental and prototyping costs, the innovator is
less likely to become the winner (Teece, 1986). But following Teece’s model, it
is the right decision for HydroHome to access complementary assets through
contracts as a startup without a strong cash position.

Figure
X: Teece’s Flow
Char for Integration or Contract Decision (Teece, 1986)

III.          
Summary for Teece’s Model Analysis and Recommendations

Due to the needs for
hydrogen fuel technological development and expansion in hydrogen FCV
population, properties right environment is not tight. This technology is still
undergoing preparadigmatic stage. While most things seem immature in this sector,
HydroHome can only make profits by owning cospecialised complimentary assets. Currently,
they outsource their most significant components in the business model,
including hydrogen supplying, storage and delivery, to the third parties.
According to Porter’s Five Forces Analysis, we can also say that HydroHome has
low bargaining power over suppliers and buyers. Thus, in long run, we suggest
HydroHome integrate these processes into their operations and directly possess
the complementary assets.